Question

Knudsen Bakeries was organized on January 1, 2019. During its first year, the company issued 2,000 shares of HK$50 par value preference shares and 100,000 shares of HK$10 par value ordinary shares. At December 31, the company declared the following cash dividends: 2019, HK$5,000; 2020, HK$12,000; and 2021, HK$28,000 (HK$ in thousands). Instructions: a. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 6% and non-cumulative. b. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 7% and cumulative. c. Journalize the declaration of the cash dividend at December 31, 2021, under part (b).

          Knudsen Bakeries was organized on January 1, 2019. During its first year, the company issued 2,000 shares of HK$50 par value preference shares and 100,000 shares of HK$10 par value ordinary shares. At December 31, the company declared the following cash dividends: 2019, HK$5,000; 2020, HK$12,000; and 2021, HK$28,000 (HK$ in thousands).

Instructions:
a. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 6% and non-cumulative.
b. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 7% and cumulative.
c. Journalize the declaration of the cash dividend at December 31, 2021, under part (b).

Added by Kevin G.

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